Pandora Can't monetise Mobile Effectively

Pandora has yet to find the silver bullet that will ensure mobile monetization.

In its most recent quarter, Pandora reported mobile revenue of $83.9 million, which is 65 per cent of total revenue. That’s up from $80.3 million a quarter prior when mobile was 64 per cent of revenue.

The broad challenge for Pandora is the same problem besetting all of mobile: advertising rates on mobile are basically flat. In fact, the company’s revenue per thousand impressions (RPM) fell slightly from a quarter prior. Desktop RPM, meanwhile, dropped 10 per cent last quarter, dragging down total RPM.

Even with the desktop decline, mobile RPM is less than half that of the desktop.

(Note: Pandora’s most recent quarterly earnings release covered the three months through April 30, 2013.)

The monetization gap is likely attributable to the surge in ad inventory that hasn’t kept up with changing habits — a glut of supply driving down prices. It may also be that mobile ads simply don’t support the same ad rates as desktop ads. This is worrying short-term, since some mobile usage will certainly cannibalise some desktop listening.

Effectively, these patterns mean that Pandora is squeezing less money out of each listener hour that it used to.

While Pandora is primarily ad-supported, it also has a subscription business. However, even taking that into account, the overall picture looks pretty similar.